What are the different types of accounting

Types of accounting

From flat rates to double bookkeeping

Bookkeeping, also known as bookkeeping, is an elementary part of accounting, with which all processes in the company are documented. Depending on the size and task of the company, different accounting regulations apply, which can generally be divided into three forms.

Types of accounting systems

The size of the company determines which type of bookkeeping is possible. If you only achieve low sales, then the flat rate as an entry into the bookkeeping is the simplest variant. Many use the income-expenditure calculation for their company, which is already generating more sales, but is not big enough to have to use double-entry bookkeeping. Many sole proprietorships use the system, which is often abbreviated as I / O invoices, to document business cases. In addition, there is double-entry bookkeeping as the largest and most extensive system.

Flat rate in accounting

The tax lump sum is a very simple form of recording. This is granted to small companies that have low but regular turnover. The small traders in the fruit and vegetable market are a good example of the tax flat rate. Due to the tax flat rate, you do not have to keep extensive bookkeeping and you do not have to show the tax for every amount.

Income and expenditure account

A second method of accounting is the income-expenditure accounting, which applies to small to medium-sized companies. With the income-expenditure calculation, which is why the companies in question are also called "income-expenditure calculators", the business cases are recorded separately and the tax is shown separately, but the accounting system is not yet as sophisticated as with double-entry bookkeeping.

But it can also happen that a sole proprietorship is obliged to double-entry bookkeeping. The prerequisite is not the size of the company, but the turnover. If you reach more than EUR 700,000 in sales in two years in a row, you are automatically obliged to keep double bookkeeping. Exceptions are farmers for whom the limit is EUR 400,000. The same applies if you exceed EUR 1,000,000 in sales in one year. Of course, you can also do double-entry bookkeeping voluntarily.

Double bookkeeping

Which means that double bookkeeping is addressed several times. This is the most complex system in accounting. It is characterized by the fact that each business case is entered twice. For example, while the income-expenditure calculator enters the expense of EUR 1,000 for a car repair in its list, the amount is entered in the debit for the car expenses and at the same time in the credit for the means of payment, e.g. the bank account if the invoice is paid by bank transfer.

So the difference has already been explained: double bookkeeping is a two-sided system that records every business case twice, i.e. every amount. In the context of double bookkeeping, there are also two results, namely the income statement and the asset comparison.

The income statement represents the direct determination of income, in which expenses and income are directly compared. When comparing assets, the indirect performance is determined by comparing the active assets with the liabilities.